The Next Bitcoin Crash Might Be Near

Bitcoin has not done anything of consequence after the recent fake out. The price keeps trading close to the 200-moving average on the 4H time frame for BTC/USD. This is a time where we need to see some sideways movement similar to last time. The only difference is that previously it was around the 200 EMA. This needs to culminate in a major decline in the near future. If that does not happen and the price instead shoots past the 200-moving average to print a series of higher highs and higher lows, then I would have to change my mind. However, so far, the probability of that happening is very low as Bitcoin remains in a strong downtrend.

It is very important to wait for confirmation. A lot of traders have been wondering what that really means. Well, it means different things for different traders because it all depends on your strategy. It could be confirmation on an indicator, a certain formation on the chart, different S/R levels etc. or a mix of all those. The point is, whatever strategy you are trading with, you have to wait for confirmation for the price to fit that strategy before it is tradeable. Sometimes, the price might make a big move to the upside or the downside but it is not tradeable because the move is abrupt and not a part of your strategy. As always, it helps to remember the good old Rothschild 80/20 rule and how you only need to trade the middle, not the beginning and the end of a move.

Recent outlook of the S&P 500 (SPX) indicates that we might see a major decline next week onwards. This would certainly put a lot of pressure on all major financial markets which in my opinion are all waiting for that same decision. If we look at WTI Crude Oil (USOIL) and the recent volatility in Bitcoin, it is all so correlated. The same goes for the correlation between S&P 500 E-Mini Futures (ES!) and the price of Silver (XAG/USD). The point is, many of these markets are interlinked and waiting for that decisive break to the downside which in my opinion would come down to the next big move in the stock market. As for the cryptocurrency market, we now have a far bigger bear flag than the one before which means that this could end a lot worse compared to the previous crash.